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Bitcoin continues to enjoy boost from El Salvador accepting it as legal tender

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·3 min read
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Bitcoin is to become legal tender in El Salvador, the country's president said. Photo: Getty Images
Bitcoin is to become legal tender in El Salvador, the country's president said. Photo: Getty Images

Cryptocurrencies were broadly up on Thursday morning as bitcoin continued to enjoy a boost from being accepted as legal tender in El Salvador, recovering from an earlier sell-off.

Bitcoin (BTC-USD) was up roughly 8%, trading at $36,935 (£26,237), still a distance away from its all-time high of more than $63,000.

Ethereum (ETH-USD), the world's second biggest crypto by market cap, ticked up 1% to trade at $2,548 and joke token Dogecoin (DOGE-USD) gained 2.5%, trading at $0.34.

“We saw a decent surge in bitcoin's price. Of course, on the fundamental side, the factor that has supported the price is El Salvador’s news,” said Naeem Aslam, chief market analyst at Ava Trade.

“Although bitcoin has become a legal tender in a small country, at the end of the day it is still huge for bitcoin’s reputation and many would not have thought that it could ever be possible.”

But he added that bitcoin’s price “is at a critical stage, and it needs to stay above the 50 and 100-day simple moving average on the four-hour time frame in order to see more gains”.

Bitcoin was up on Thursday morning. Chart: Yahoo Finance UK
Bitcoin was up on Thursday morning. Chart: Yahoo Finance UK

“If the price drops below these moving averages and stays below them, we are likely to see more pain for Bitcoin… we certainly need to see more bull momentum for this recent rally to continue.

Fintech Strike, which is partnering with El Salvador to build its modern financial infrastructure using bitcoin technology, said: "Making bitcoin legal tender is a leapfrog moment that can help countries like El Salvador shift from a largely cash economy to an innovative, inclusive, and transparent digital economy where your bank account is your phone."

Watch: What is bitcoin?

Analysts have also noted that other developing countries may follow suit.

And given the context of the environmental concerns around crypto mining it is also big news that El Salvador's prime minister tweeted plans to offer facilities for bitcoin mining with clean and renewable energy from the country's volcanoes.

"I didn't even know that energy from volcanoes could be harvested in this way, but it's really good to see this sort of innovation being sparked by bitcoin," said Mati Greenspan, CEO of quantumeconomics.io.

Earlier this week, bitcoin prices had plunged after former US president Donald Trump called it a "scam". And the weekend had been turbulent for cryptos following reports that Chinese social media site Weibo suspended "key opinion leaders", reigniting fears of a further crypto crackdown in the country.

Watch: What are the risks of investing in cryptocurrency?